“We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow,” Ginni Rometty, who took over as chief executive on January 1, said in a statement on Thursday.

“We are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015.”

This year, IBM plans to increase full year earnings per share, excluding items, by 10.5 percent to at least $14.85 after reporting fourth-quarter profit, excluding items, was $4.71 per share above average expectations of $4.62 according to Thomson Reuters I/B/E/S.

International Business Machines, a tech bellwether because of its global reach and scale, brought in revenue of $29.5 billion, up from $29.0 billion in the same period last year and just below average estimates of $29.7 billion.

It said its services backlog was $141 billion, up $5 billion adjusting for currency, while signings of services contracts in the fourth quarter were $20.4 billion versus expectations of $20.1 billion.

Investors view signings as a key indicator of future profits. But IBM says the focus should be more on total backlog of business because it is a better sign of revenue to come.

Globally, IBM reported a 3 percent revenue gain in the Americas and 1 percent in Europe, Middle East and Africa in the fourth quarter. Revenue in the Asia-Pacific region fell 1 percent adjusted for currency effects, while revenue in the BRIC countries was up 8 percent.

Kim Forrest, senior analyst for Fort Pitt Capital Group said: “They are bullish for the next quarter, so I am pretty happy as a holder of IBM.” She added she was “unbelievably encouraged by their margins.”

IBM share were up 2.7 percent at $185.50 in extended trade after closing at $180.52 on Thursday.